The arrangement was officially announced on the club website on Wednesday with the Brazilian full back due to hold a press conference on Thursday at 14:00 CET.
Marcelo has made 414 appearances in total for Real and with his contract extension can expect to overtake Roberto Carlos's tally of 527 as the foreign player with the most appearances for the club. When the Brazil legend left the club six months later, Marcelo inherited his left back position after playing largely on the wing during his early Bernabéu career under Juande Ramos.
Real Madrid have the option of appealing against the decision, Marca reports, but it would seem pointless at this stage and the Spanish giants may as well just accept the punishment dealt out to their left-back.
Real Madrid's Marcelo is shown a red card by referee.
Real Madrid defender Marcelo has been told he will serve a two-match ban following his red card against Levante on Saturday.
Real Madrid can appeal Marcelo's ban within a period of 10 days.
The Liga champions have had three players sent off in their first five domestic games this season, with former Madrid player Alvaro Arbeloa claiming officials were biased against them.